CytoDyn Inc 10-Q/A for FY2023 Q1

CytoDyn Inc. (CYDY)

10-Q/A 2022-10-13 For: 2022-08-31

Added on April 12, 2026

About this 10-Q/A

CytoDyn Inc filed this 10-Q/A on October 13, 2022, covering the quarter ended August 31, 2022 (FY2023 Q1).

Headline figures

Quarter ended August 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $20.99M; compared with a net loss of $45.34M a year earlier
Diluted EPS: -$0.03; compared with -$0.07 a year earlier


Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
None		None		None


		PAGE
PART I	4
	ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS	4
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	27
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	40
	ITEM 4. CONTROLS AND PROCEDURES	40
PART II	42
	ITEM 1. LEGAL PROCEEDINGS	42
	ITEM 1A. RISK FACTORS	42
	ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	42
	ITEM 6. EXHIBITS	43

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Delaware	83-1887078
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer or Identification No.)

1111 Main Street, Suite 660 Vancouver, Washington	98660
(Address of principal executive offices)	(Zip Code)


Large Accelerated Filer	☒	Accelerated Filer	☐

Non-accelerated Filer	☐	Smaller Reporting Company	☐

		Emerging Growth Company	☐


		August 31, 2022		May 31, 2022
Assets
Current assets:
Cash	$	4,676	$	4,231
Prepaid expenses		4,143		5,198
Prepaid service fees		1,038		1,086
Total current assets		9,857		10,515
Inventories, net		17,929		17,929
Other non-current assets		608		741
Total assets	$	28,394	$	29,185
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	68,991	$	67,974
Accrued liabilities and compensation		5,014		8,995
Accrued interest on convertible notes		7,120		5,974
Accrued dividends on convertible preferred stock		4,361		3,977
Convertible notes payable, net		36,833		36,241
Total current liabilities		122,319		123,161
Operating leases		387		422
Total liabilities		122,706		123,583
Commitments and Contingencies (Note 9)
Stockholders’ deficit:
Preferred stock, $0.001 par value; 5,000 shares authorized:
Series B convertible preferred stock, $0.001 par value; 400 authorized; 19 issued and outstanding at August 31, 2022 and May 31, 2022, respectively		—		—
Series C convertible preferred stock, $0.001 par value; 8 authorized; 6 and 7 issued and outstanding at August 31, 2022 and May 31, 2022, respectively		—		—
Series D convertible preferred stock, $0.001 par value; 12 authorized; 9 issued and outstanding at August 31, 2022 and May 31, 2022, respectively		—		—
Common stock, $0.001 par value; 1,350,000 shares authorized; 812,698 and 720,028 issued, and 812,255 and 719,585 outstanding at August 31, 2022 and May 31, 2022, respectively		813		720
Treasury stock, $0.001 par value; 443 at August 31, 2022 and May 31, 2022		—		—
Additional paid-in capital		687,732		671,013
Accumulated deficit		(782,857)		(766,131)
Total stockholders’ deficit		(94,312)		(94,398)
Total liabilities and stockholders' deficit	$	28,394	$	29,185


	Three months ended August 31,
	2022		2021
				(Restated) ⁽¹⁾
Revenue	$	—	$	41
Cost of goods sold		—		1
Gross margin		—		40
Operating expenses:
General and administrative		6,333		7,617
Research and development		576		12,020
Amortization and depreciation		99		276
Inventory charge		2,704		1,764
Total operating expenses		9,712		21,677
Operating loss		(9,712)		(21,637)
Interest and other expense:
Interest on convertible notes		(1,146)		(1,686)
Amortization of discount on convertible notes		(576)		(952)
Amortization of debt issuance costs		(16)		(28)
Loss on induced conversion		—		(18,530)
Finance charges		(940)		(35)
Inducement interest expense		—		(528)
Legal settlement		—		(1,941)
Loss on derivatives		(8,601)		—
Total interest and other expense		(11,279)		(23,700)
Loss before income taxes		(20,991)		(45,337)
Income tax benefit		—		—
Net loss	$	(20,991)	$	(45,337)
Basic and diluted:
Weighted average common shares outstanding		787,856		632,597
Loss per share	$	(0.03)	$	(0.07)


	Preferred stock			Common stock			Treasury stock			Additional		Accumulated		Total stockholders'
	Shares	Amount		Shares	Amount		Shares	Amount		paid-in capital		deficit		deficit
Balance at May 31, 2022	35	$	—	720,028	$	720	443	$	—	$	671,013	$	(766,131)	$	(94,398)
Stock issued for compensation	—		—	879		1	—		—		344		—		345
Stock issued for private offerings	—		—	85,378		85	—		—		17,459		—		17,544
Issuance costs related to stock issued for private offerings	—		—	—		—	—		—		(6,289)		—		(6,289)
Conversion of Series C convertible preferred stock to common stock	(1)		—	1,136		1	—		—		(1)		—		—
Warrant exercises	—		—	657		1	—		—		263		—		264
Deemed dividend paid in common stock due to down round provision, recorded in additional paid-in capital	—		—	4,620		5	—		—		(5)		—		—
Accrued preferred stock dividends	—		—	—		—	—		—		(384)		—		(384)
Reclassification of warrants from liability to equity classified	—		—	—		—	—		—		8,601		—		8,601
Stock-based compensation	—		—	—		—	—		—		996		—		996
Reclassification to additional paid-in capital of prior period preferred stock dividends previously charged to accumulated deficit	—		—	—		—	—		—		(4,265)		4,265		—
Net loss	—		—	—		—	—		—		—		(20,991)		(20,991)
Balance at August 31, 2022	34	$	—	812,698	$	813	443	$	—	$	687,732	$	(782,857)	$	(94,312)


	August 31, 2022		May 31, 2022
Raw materials	$	16,264	$	16,264
Work-in-progress		1,665		1,665
Total inventories, net	$	17,929	$	17,929


			Raw Materials								Work-in-progress
(in thousands, Expiration period ending August 31,)	Remaining shelf-life (mos)		Specialized		Resins		Other		Total Raw Materials	Bulk drug product		Finished drug product		Total inventories
2023	0 to 12	$	3,658	$	-	$	1,421	$	5,079	$	1,824	$	-	$	6,903
2024	13 to 24		682		16,264		1,590		18,536		1,665		-		20,201
2025	25 to 36		2,099		-		-		2,099		-		29,142		31,241
2026	37 to 48		3,435		-		-		3,435		-		32,344		35,779
Thereafter	49 or more		-		-		-		-		-		-		-
Inventories, gross			9,874		16,264		3,011		29,149		3,489		61,486		94,124
Inventory charge			(9,874)		-		(3,011)		(12,885)		(1,824)		(61,486)		(76,195)
Inventories, net		$	-	$	16,264	$	-	$	16,264	$	1,665	$	-	$	17,929


		August 31, 2022		May 31, 2022
Compensation and related expense	$	792	$	1,522
Legal fees and settlement		1,017		2,006
Clinical expense		311		3,727
Unbilled inventory		2,218		1,392
License fees		541		150
Lease payable		135		134
Other liabilities		-		64
Total accrued liabilities	$	5,014	$	8,995


	August 31, 2022						May 31, 2022
(in thousands)	Series B		Series C		Series D		Series B		Series C		Series D
Shares of preferred stock		19		6		9		19		7		9
Total shares of common stock if converted		190		12,670		10,565		190		13,806		10,565
Undeclared dividends	$	11	$	-	$	-	$	10	$	-	$	-
Accrued dividends	$	-	$	2,186	$	2,175	$	-	$	2,014	$	1,963
Total shares of common stock if dividends converted		22		4,372		4,350		20		4,028		3,926

For additional information about the Company’s debt policies, refer to Note 2, Summary of Significant Accounting Policies, of the 2022 Form 10-K. Outstanding balances associated with the Company’s convertible notes and related accrued interest are as follows:
	August 31, 2022						May 31, 2022
(in thousands)	April 2, 2021 Note		April 23, 2021 Note		Total		April 2, 2021 Note		April 23, 2021 Note		Total
Convertible notes payable outstanding principal	$	9,819	$	28,500	$	38,319	$	9,819	$	28,500	$	38,319
Less: Unamortized debt discount and issuance costs		(359)		(1,127)		(1,486)		(512)		(1,566)		(2,078)
Convertible notes payable, net		9,460		27,373		36,833		9,307		26,934		36,241
Accrued interest on convertible notes		2,920		4,200		7,120		2,599		3,375		5,974
Outstanding convertible notes payable, net and accrued interest	$	12,380	$	31,573	$	43,953	$	11,906	$	30,309	$	42,215


(in thousands)		Liability Classified Warrants
Balance at May 31, 2022	$	—
Classified as liability due to lack of shares availability at issuance		14,522
Classified as equity upon increase in availability		(23,123)
Loss on derivative due to change in fair market value		8,601
Balance at August 31, 2022	$	—



	Initial Fair Market Value At Issuance			Fair Market Value at August 31, 2022
	Backstop	Backstop	Placement	Backstop	Backstop	Placement
	Warrant #1	Warrant #2	Agent Warrants	Warrant #1	Warrant #2	Agent Warrants
Fair value of underlying stock	$ 0.44	$ 0.42	$ 0.44	$ 0.52	$ 0.52	$ 0.52
Risk free rate	3.17%	3.06%	3.13%	3.34%	3.31%	3.16%
Expected term (in years)	4.65	5.00	10.00	4.46	4.88	9.82
Stock price volatility	110.20%	109.49%	95.99%	117.29%	113.59%	95.87%
Expected dividend yield	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%


				Weighted
				average
		Weighted		remaining	Aggregate
	Number of	average		contractual	intrinsic
(in thousands, except per share data)	shares	exercise price		life in years	value
Options and warrants outstanding at May 31, 2022	90,705	$	0.77	4.06	$	352
Granted	104,104	$	0.25
Exercised	(863)	$	0.49
Forfeited, expired, and cancelled	(484)	$	1.57
Options and warrants outstanding at August 31, 2022	193,462	$	0.48	4.36	$	36,758
Options and warrants outstanding and exercisable at August 31, 2022	187,896	$	0.45	4.24	$	36,717


	Three months ended August 31,
(in thousands, except per share amounts)	2022		2021
				(Restated) ⁽¹⁾
Net loss	$	(20,991)	$	(45,337)
Less: Deemed dividends due to down round provision		(4,154)		—
Less: Accrued preferred stock dividends		(385)		(425)
Net loss applicable to common stockholders	$	(25,530)	$	(45,762)
Basic and diluted:
Weighted average common shares outstanding		787,856		632,597
Loss per share	$	(0.03)	$	(0.07)


Fiscal Year	Amount
2023 (9 months remaining)	$	34,638
2024		121,750
2025		76,400
2026 and thereafter		—
Total	$	232,788


	Three months ended August 31,				Change
(in thousands)	2022		2021		$
Net cash (used in) provided by:
Net cash used in operating activities	$	(11,074)	$	(31,741)	$	20,667
Net cash used in investing activities	$	—	$	(8)	$	8
Net cash provided by financing activities	$	11,519	$	4,348	$	7,171


	As of
(in millions)	August 31, 2022
Issuable upon:
Warrants exercise	176.2
Convertible preferred stock and undeclared dividends conversion	32.2
Outstanding stock options exercise or vesting of outstanding RSUs	17.4
Reserved for issuance pursuant to future stock-based awards under equity incentive plan	26.1
Reserved and issuable upon conversion of outstanding convertible notes	12.0
Total shares reserved for future uses	263.8
Common stock outstanding	812.3


			Incorporated by Reference
Exhibit No	Description	Filed Herewith	Form	Exhibit No.	Filing Date
3.1	Amended and Restated Certificate of Incorporation, as amended August 31, 2022.		10-Q	3.1	October 11, 2022

31.1	Rule 13a-14(a) Certification by President of Registrant.	X

31.2	Rule 13a-14(a) Certification by CFO of the Registrant.	X

32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.*	X

101.INS	Inline XBRL Instance Document.	X

101.SCH	Inline XBRL Taxonomy Extension Schema Document.	X

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.	X

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.	X

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.	X

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.	X

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).	X


	CYTODYN INC.
	(Registrant)

Dated: October 13, 2022		/s/ Cyrus Arman
		Cyrus Arman
		President
		(Principal Executive Officer)


	August 31, 2022
Weighted average remaining lease term	3.6	years
Weighted average discount rate	10.0	%


	Three months ended August 31,				Change
(in thousands, except for per share data)	2022		2021		$		%
			(Restated) ⁽¹⁾
Revenue	$	—	$	41	$	(41)	(100)
Cost of goods sold		—		1		(1)	(100)
Gross margin		—		40		(40)	(100)
Operating expenses:
General and administrative		6,333		7,617		(1,284)	(17)
Research and development		576		12,020		(11,444)	(95)
Amortization and depreciation		99		276		(177)	(64)
Inventory charge		2,704		1,764		940	53
Total operating expenses		9,712		21,677		(11,965)	(55)
Operating loss		(9,712)		(21,637)		11,925	55
Interest and other expense:
Interest on convertible notes		(1,146)		(1,686)		540	32
Amortization of discount on convertible notes		(576)		(952)		376	39
Amortization of debt issuance costs		(16)		(28)		12	43
Loss on induced conversion		—		(18,530)		18,530	100
Finance charges		(940)		(35)		(905)	(2,586)
Inducement interest expense		—		(528)		528	100
Legal settlement		—		(1,941)		1,941	100
Loss on derivatives		(8,601)		—		(8,601)	(100)
Total interest and other expense		(11,279)		(23,700)		12,421	52
Loss before income taxes		(20,991)		(45,337)		24,346	54
Income tax benefit		—		—		—	—
Net loss		(20,991)		(45,337)		24,346	54
Basic and diluted:
Weighted average common shares outstanding		787,856		632,597	$	155,259	25
Loss per share	$	(0.03)	$	(0.07)		0.04	55



Dated: October 13, 2022			/s/ Antonio Migliarese
			Antonio Migliarese
			Chief Financial Officer
			(Principal Financial and Accounting Officer)


Date: October 13, 2022		/s/ Cyrus Arman
		Cyrus Arman, Ph.D.
		President